Unemployment Falls and Labor Force Plunges

Unemployment fell sharply in southwestern Pennsylvania last month. But the good news is tempered by continued contraction of the regional labor force, which plunged to its lowest level since June 1991, according to the latest Pennsylvania Department of Labor data.

Unemployment in the seven-county Pittsburgh Metropolitan Statistical Area dropped one full percentage point — from 7.5 percent in April 2021 to 6.5 percent in May. And it is a significant improvement from the 14.2 percent unemployment rate the region reported in May 2020.

“That’s a huge drop,” said Chris Briem, regional economist at the University of Pittsburgh Center for Social and Urban Research.

The unemployment rate fell across the region. Butler County held the lowest unemployment rate at 5.1 percent. The highest rate was reported in Fayette County, where 8.4 percent of workers were unemployed. In Allegheny County, home to the City of Pittsburgh, 6.5 percent of workers were without work in May.

But the Pittsburgh region continues to struggle to add workers to its labor force. In May, the number of people in the region’s labor force number fell below the lowest point during the pandemic.

The region’s labor force was short 31,000 workers in May compared to a year earlier. And it has lost 10,700 workers since April 2021, despite the waning number of new COVID cases and improving job opportunities.

“It’s a troubling sign,” Briem said. “There’s a little labor force drop in the national numbers but, locally, it’s orders of magnitude different. There should be a seasonal labor force jump over the past month and that didn’t happen.”

People in the region and across the country have exited the labor force during the pandemic for reasons ranging from older adults taking early retirement to women leaving the workforce to care for children or elderly. “But the story over the past month, to me, is that there aren’t the college kids in general coming into the labor force that you would typically see at this time.”

Student workers and young adults play a large role in the region’s economy and many attended school remotely this past year.

Their absence in the labor force can have a rippling impact. “If all those college kids who were remote for the spring aren’t here for the summer, it gives other people another set of options,” Briem said. “The youngest part of the labor force are now covering jobs that they might not normally be doing.”

Businesses throughout the United States are reporting difficulty finding workers. Not only is southwestern Pennsylvania reeling from large losses of workers, businesses face stiff competition trying to recruit them. “I think the bigger challenge for the region is that the labor force demand coming out of COVID is pretty strong everywhere,” Briem said. “These aren’t unique stories to here. People are seeing wage increases and job opportunities across the nation.

“We tend to focus on the higher end of the workforce — the higher educated folk. But the bulk of the labor force is still people who don’t have advanced degrees. And those folks are seeing opportunities elsewhere.”